78R4351 CLG-D
By: Gallego H.B. No. 2225
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of private child support enforcement
agencies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading of Subchapter B, Chapter 396,
Finance Code, is amended to read as follows:
SUBCHAPTER B. POWERS AND DUTIES OF ATTORNEY GENERAL
[DEPARTMENT]
SECTION 2. Section 396.051, Finance Code, is amended to
read as follows:
Sec. 396.051. ADMINISTRATIVE AND RULEMAKING AUTHORITY. (a)
The attorney general [department] shall administer this chapter.
(b) The attorney general [Finance Commission of Texas]
shall adopt rules as necessary for the administration of this
chapter.
SECTION 3. Section 396.052(a), Finance Code, is amended to
read as follows:
(a) The attorney general [department] shall charge each
applicant for a certificate of registration, or renewal of a
certificate, a nonrefundable fee of $500 for each certificate.
SECTION 4. Section 396.053, Finance Code, is amended to
read as follows:
Sec. 396.053. COST OF REGULATION. The attorney general
[department] may charge each registered private child support
enforcement agency an annual fee not to exceed $500 to cover the
cost of enforcing this chapter.
SECTION 5. Section 396.101, Finance Code, is amended to
read as follows:
Sec. 396.101. REGISTRATION REQUIRED. Except as otherwise
provided by this chapter, a private child support enforcement
agency must register with the attorney general [department] to
engage in child support enforcement in this state.
SECTION 6. Section 396.102, Finance Code, is amended to
read as follows:
Sec. 396.102. RECOGNITION OF AUTHORIZATION ISSUED BY
ANOTHER STATE. (a) The attorney general [department] may waive any
prerequisite to obtaining a registration for a foreign agency:
(1) after reviewing the applicant's credentials and
determining that the applicant holds a valid registration or other
authorization from another state whose requirements are
substantially equivalent to those imposed under this chapter; or
(2) after determining the applicant has a valid
registration or other authorization from another state with which
this state has a reciprocity agreement.
(b) The attorney general [department] may enter into an
agreement with another state to permit registration by reciprocity.
SECTION 7. Section 396.103(a), Finance Code, is amended to
read as follows:
(a) An applicant for registration as a private child support
enforcement agency must file with the attorney general [department]
an application on a form and in the manner prescribed by the
attorney general [department].
SECTION 8. Section 396.104, Finance Code, is amended to
read as follows:
Sec. 396.104. FINANCIAL AND OTHER DISCLOSURES. The
attorney general [department] shall require an applicant for
registration or renewal of registration as a private child support
enforcement agency to provide:
(1) a certified financial statement demonstrating the
financial solvency of the agency for which registration or renewal
of registration is sought; and
(2) any other information the attorney general
[department] may reasonably require the applicant to provide to
establish that the requirements and qualifications for
registration or renewal of registration have been fulfilled by the
applicant.
SECTION 9. Sections 396.105(a), (c), and (d), Finance Code,
are amended to read as follows:
(a) An application for registration must be accompanied by a
surety bond approved by the attorney general [department].
(c) The surety bond must be filed with and held by the
attorney general [department].
(d) Instead of a surety bond, the attorney general
[department] may accept a deposit of money in an amount determined
by the attorney general [department] not to exceed $50,000. The
attorney general [department] shall deposit any amounts received
under this subsection in an insured depository account designated
for that purpose.
SECTION 10. Section 396.106, Finance Code, is amended to
read as follows:
Sec. 396.106. ISSUANCE OF CERTIFICATE OF REGISTRATION.(a)
The attorney general [department] shall issue a certificate of
registration and mail the certificate to the applicant on receipt
of:
(1) a completed application;
(2) evidence of financial solvency;
(3) the surety bond or deposit of money required by
Section 396.105; and
(4) the required registration fee.
(b) If a single application is used to register more than
one registered location, the attorney general [department] shall:
(1) issue a certificate of registration for each
registered location; and
(2) mail all of the certificates to the principal
business location stated in the application.
SECTION 11. Section 396.107, Finance Code, is amended to
read as follows:
Sec. 396.107. DUTY TO UPDATE APPLICATION INFORMATION. A
certificate holder shall notify the attorney general [department]
of any material change in the information provided in an
application for registration not later than the 60th day after the
date on which the information changes.
SECTION 12. Section 396.108(b), Finance Code, is amended to
read as follows:
(b) A certificate of registration may be renewed for another
three-year period as provided by attorney general [department]
rule.
SECTION 13. Section 396.151, Finance Code, is amended to
read as follows:
Sec. 396.151. APPLICATION TO OPERATE UNDER OTHER
AUTHORIZATION INSTEAD OF REGISTRATION. (a) To engage in business in
this state, a foreign agency that is exempt from registration as
prescribed by Section 396.102 may file an application with the
attorney general [department] to operate under that authorization
by filing:
(1) the information required for an application for
registration under Section 396.103;
(2) a surety bond or deposit of money that meets the
requirements of Section 396.105 unless the agency provides proof to
the satisfaction of the attorney general [department] that the
agency maintains in the state in which that agency has its principal
office an adequate bond or similar instrument for purposes similar
to the purposes required for the filing of a surety bond under
Section 396.105; and
(3) a copy of the license or other authorization
issued by the state in which that agency is authorized to operate.
(b) The attorney general [department] may charge a single
administrative fee in a reasonable amount that is sufficient to
cover the costs of [the department in] processing and acting on the
application.
SECTION 14. Section 396.152, Finance Code, is amended to
read as follows:
Sec. 396.152. ACCEPTANCE OF OTHER AUTHORIZATION INSTEAD OF
REGISTRATION. The attorney general [department] shall issue a
certificate to operate under another state's authorization in this
state to a foreign agency that files an application with the
attorney general [department] under Section 396.151 if:
(1) the agency submits all of the information required
by Section 396.151(a)(1);
(2) the attorney general [department] determines that
the agency has met the requirements of Section 396.151(a)(2);
(3) the agency remits any required administrative fee
under Section 396.151(b); and
(4) the attorney general [department] verifies that
the registration or other authorization issued by another state is
active and in good standing.
SECTION 15. Section 396.153, Finance Code, is amended to
read as follows:
Sec. 396.153. NOTIFICATION OF UPDATED INFORMATION OR CHANGE
IN STATUS OF OTHER AUTHORIZATION. Not later than the 30th day after
the date on which the change occurs, a foreign private child
support enforcement agency that is issued a certificate to operate
in this state under this subchapter shall notify the attorney
general [department] of any change in:
(1) the information provided in an application
submitted under Section 396.152; or
(2) the status of the agency's authorization in the
other state.
SECTION 16. Section 396.154, Finance Code, is amended to
read as follows:
Sec. 396.154. WITHDRAWAL IF APPROVAL TO OPERATE UNDER OTHER
AUTHORIZATION. A holder of a certificate issued under this
subchapter may not engage in business in this state as a private
child support enforcement agency if another state has revoked or
withdrawn the person's authority to operate as a private child
support enforcement agency in that state unless the attorney
general [department] grants the agency a registration under this
chapter.
SECTION 17. Section 396.203, Finance Code, is amended by
adding Subsection (c) to read as follows:
(c) The contract required under this section must contain a
provision that allows the client the option to terminate the
contract before the end of the contract period on the payment of an
amount not to exceed $25 that is specifically stated in the
contract. An attempted waiver of the required provision is void.
SECTION 18. Section 396.252, Finance Code, is amended to
read as follows:
Sec. 396.252. FRAUDULENT, DECEPTIVE, OR MISLEADING
REPRESENTATIONS. In enforcing a child support obligation, a
registered agency or employee of the agency may not:
(1) identify the registered agency by any name other
than one by which the agency is registered with the attorney
general [department];
(2) falsely represent the nature of the child support
enforcement activities in which the agency is authorized by law to
engage; or
(3) falsely represent that an oral or written
communication is the communication of an attorney.
SECTION 19. Subchapter F, Chapter 396, Finance Code, is
amended by adding Section 396.253 to read as follows:
Sec. 396.253. FEE OR OTHER CONSIDERATION RECEIVED BY
AGENCY. For child support enforcement, a registered agency or
foreign agency authorized to engage in business under this chapter
may not receive a fee or other consideration that exceeds 25 percent
of the total amount received by the agency from the obligor.
SECTION 20. Section 396.301, Finance Code, is amended to
read as follows:
Sec. 396.301. REVOCATION OF REGISTRATION. (a) After notice
and hearing, the attorney general [department] may revoke the
registration of a registered agency that:
(1) fails to comply with this chapter or a rule adopted
under this chapter;
(2) does not pay a fee or other charge imposed by the
attorney general [department] under this chapter; and
(3) fails to maintain and produce at the request of the
attorney general [department] records attesting to the financial
solvency of the registered agency or other business records
concerning client accounts.
(b) The attorney general [department] may permit a
registered agency to take an appropriate action to correct a
failure to comply with this chapter and not revoke the registration
of the agency.
SECTION 21. Section 396.302(a), Finance Code, is amended to
read as follows:
(a) The attorney general [department] may not deny or
suspend the registration of a private child support enforcement
agency under this chapter without first conducting an
administrative hearing.
SECTION 22. Sections 396.304(a), (b), (e), (f), and (g),
Finance Code, are amended to read as follows:
(a) A person may file with the attorney general [department]
a written complaint against a registered agency for a violation of
this chapter.
(b) Not later than the 30th day after the date on which the
attorney general [department] receives a complaint under this
section, the attorney general [department] shall initiate an
investigation into the merits of the complaint.
(e) The attorney general [department] may [delegate to a
hearings officer appointed to investigate a complaint under this
section the authority to] dismiss the complaint, after an initial
investigation and after notice to each affected party and an
opportunity for hearing, for lack of sufficient evidentiary basis.
(f) An individual aggrieved by a decision of the attorney
general [department or hearings officer] under this section may
appeal the decision to a district court in Travis County.
(g) The attorney general [department] shall provide for an
annual public inspection of an investigation report of a complaint
filed under this section.
SECTION 23. Section 396.352(b), Finance Code, is amended to
read as follows:
(b) A foreign agency engaging in business in this state in
violation of this chapter is considered to have appointed the
attorney general [department] as the agency's agent for service of
process in any action, suit, or proceeding arising from a violation
of this chapter.
SECTION 24. Subchapter H, Chapter 396, Finance Code, is
amended by adding Section 396.354 to read as follows:
Sec. 396.354. VOIDABLE CONTRACT. (a) A contract that does
not contain the provision required by Section 396.203(c) is
voidable at the option of the client. The client is entitled to
recover any amount the registered agency or foreign agency received
as compensation in connection with the contract.
(b) A person who prevails in an action to enforce the
person's rights under this section is entitled to recover court
costs and reasonable attorney's fees.
SECTION 25. Sections 396.001(3) and 396.304(c) and (d),
Finance Code, are repealed.
SECTION 26. Sections 396.203(c), 396.253, and 396.354,
Finance Code, as added by this Act, apply only to a contract that is
entered into on or after the effective date of this Act.
SECTION 27. This Act takes effect September 1, 2003.